The Financial Supervisory Service (FSS) has issued a consumer alert regarding the misuse of so-called 'group accounts' that appear to be in individual names, which have been exploited for rental fraud and voice phishing schemes.
On May 28, the FSS announced it is issuing a 'caution' alert to prevent further damage from these group accounts that impersonate individual names.
A 'group account' is created by using a fictitious name that resembles a personal name, allowing individuals to open accounts under this name at financial institutions. For example, a group name like 'Residents' Association for Road Expansion in Hong-eun-dong' could be shortened to 'Hong Gil-dong.' According to the Financial Real Name Act, individuals can open accounts using their legal names, while groups can do so using a unique number issued by the tax office.
The issue arises because these group accounts can easily be mistaken for personal accounts. If a transaction partner sees that the name on the contract matches the account holder's name, they may transfer money without suspicion, only to find out that the recipient is a group, not an individual.
In one instance, a real estate agent created a group account under the name of a landlord to collect security deposits from tenants. According to the FSS, the agent, identified as A, misled the landlord, B, into believing that a monthly rental contract was signed, and then received approximately 800 million won in security deposits into the group account named after B.
The FSS believes that financial crimes involving these group accounts cannot be avoided through typical consumer precautions alone. As a result, they plan to improve account management practices at financial institutions. They have instructed banks to exercise particular caution when processing applications for accounts that could be mistaken for individual names.
Additionally, the FSS plans to require that when accounts are issued to groups, the label '(Group)' be added next to the group name. Consequently, the account name will appear as 'Hong Gil-dong (Group)' instead of just 'Hong Gil-dong' during transactions. Banks are expected to implement this change by June, while smaller financial institutions aim to do so by September.
The FSS specifically cautioned that when transferring large sums, such as security deposits, if the account name includes '(Group)' next to what appears to be an individual's name, it indicates that the account belongs to a group, and consumers should exercise caution when sending money.
* This article has been translated by AI.
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